Move over America and Japan, China's taking over the luxury limelight. According to a new report from investment research group CLSA, China is poised to become the world's largest market for luxury goods by 2020. A rapidly expanding middle and upper class in China are seeking to enhance their identity and quality of life with luxury goods.

China is a hot market for luxury goods.

For those manufacturers who can survive counterfeit products, luxury taxes and consumer education, great rewards await.

Cathy Zhang is one of China's 250 million middle class elite who have a lust for labels.

She makes a purchase once every 2 or 3 months, spending around 10 thousand dollars a year. That's almost a quarter of her annual income.

But Zhang says its money well spent.

Cathy Zhang, Luxury Consumer in Beijing, said, "It's definitely worth it. I think you can use it for a longer time. When you are using it, you can appreciate its quality and design. "

According to Goldman Sachs, of the 250 million middle class Chinese, around one million are active buyers, spending 7 billion US dollars a year.

Bruno Lannes, a partner of consulting company Bain, says a legion of young luxury consumers is rising at a dizzying speed in China.

In the past three years, the income of the post-80's generation grew 34 percent. And without a generation before them to refer to style-wise, young consumers are daring with the choices they make.

"Of course China is a luxury consumption power. This fits with its economic position in the world. "

"If financially allowed, buying luxury goods is understandable. They are symbols of social status. "

"When I get rich, I'd like to consume more. Because those products indicate social status, which is desirable for a man."

The comments reflect a key explanation for the boom - the desire for visibility that comes with association with brand names.

Cash-heavy consumers are eager to appear flashy and are willing to pay premium prices to catch second glances.

At the core, however, is the honest pursuit of better living conditions.

Decades of strong economic growth has produced a whole new generation of millionaires. These people have formed the large market that is still growing day by day.